DaBomb secures new product orders from US livestock clients; new production lines expected to reach 70% utilization rate next year.

DaBomb Protein Biotech Corp. (6578-TWThe newly built 20-ton liquid fermentation tank production line is expected to be completed by the middle of next year. It is understood that this is mainly to meet the new product orders from customers in the US livestock industry. It is expected that the utilization rate will reach 60-70% after production starts. In addition, the gross profit margin of the product is at least 40%, which will help DaBomb improve its profitability next year.

DaBomb focuses on the animal nutrition fermentation industry. In the past, it mainly provided mixed contract manufacturing for the downstream process. Seeing the business opportunities in probiotics, enzymes, and postbiotics, it has increased its capital expenditure to nearly 100 million yuan this year to build upstream liquid fermentation tanks in order to provide customers with one-stop production services.

It is understood that DaBomb liquid fermentation tanks can provide products such as probiotics, enzymes, and yeasts, and are currently favored by customers in the US livestock industry. Once the liquid fermentation tanks are completed by the middle of next year, they can start contributing revenue in the third quarter. In addition, DaBomb 's US customers do not rule out the possibility that this will be a key production site for their future expansion in Southeast Asia.

In terms of revenue DaBomb , peptides account for 88% and enzymes account for 12%. The company mentioned that its enzymes have a high concentration and are already patented, giving them a relatively high market competitiveness. Furthermore, the gross profit margin of enzymes starts at at least 40%, which is also a key factor in the company's improved profitability. The company aims to further increase the revenue share to 30% by 2026.

Regarding peptides, DaBomb admitted that although this product is the main source of revenue, the gross profit is relatively low. Next year, they will focus on maintaining stable revenue. In addition, the low-carbon protein DaBomb-P P550, which is currently under development, will be launched as early as the end of the first quarter of next year, with a target revenue contribution of 500-600 million yuan next year.

Overall, after DaBomb stopped losses at its Zhangzhou plant in Fujian, China, it strived to break even in the fourth quarter of this year. Next year, with new production lines coming online and product mix optimization, it is expected to achieve a small profit for the full year. DaBomb reported a net loss of 53.68 million yuan after tax for the first three quarters, an increase in losses compared to the same period last year, with a loss per share of 1.04 yuan.

The above content is excerpted from a news article published by Juheng.com reporter Shen Xiaozhen on November 12, 2023.